“Anticipation and Consumption,” Neil Thakral, Brown University

BEHAVIORAL SCIENCES WORKSHOP

Abstract: Cash transfer payments are an increasingly widespread policy tool in developed and developing countries, used for both short-term and long-term objectives. We study the design of these policies by examining how the time horizon over which households anticipate receiving transfer payments affects consumption and savings. Using Nielsen Consumer Panel data, we estimate higher marginal propensities to spend for US households scheduled to receive the 2008 Economic Stimulus Payments sooner. Analyzing data from randomized experiments in Kenya and Malawi, we document higher savings among households scheduled to wait longer before receiving lump-sum transfers. We discuss implications of our results through a model of mental accounting.

Neil Thakral is the Nancy Donohue and Diane Elam Assistant Professor of Economics and International and Public Affairs at Brown University. His recent research focuses on adaptive choice experiments and utility from anticipation. He is a member of the editorial board of the Review of Economics and Statistics and the Journal of Mathematical Economics.

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Cosponsored by the Center for the Study of American Politics (CSAP) and the School of Management’s International Center for Finance and the Lynne & Andrew Redleaf Foundation.